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horizontal drilling

Oklahoma City attorney and legislative watchdog Jerry Fent, who has successfully challenged laws in the past, comes out of a hearing room at the State Supreme Court, where a referee heard his lawsuit over House Bill 2562.
Joe Wertz / StateImpact Oklahoma

The State Supreme Court on July 29 heard a lawsuit and constitutional challenge to House Bill 2562, a measure that would change the effective state tax rate levied on oil and gas production.

Both parties agreed that the measure was written to reduce taxes, but is HB 2562 a “revenue bill?” That definition is important because this court battle isn’t about policy, it’s about procedure.

House Speaker Jeff Hickman (R-Fairview) at Gov. Mary Fallin's State of the State address - February 3, 2014.
Joe Wertz / StateImpact Oklahoma

A controversial bill setting the effective tax rate on new oil and gas wells was one of the capstones of the 2014 legislative session.

StateImpact Oklahoma reporter Joe Wertz appeared on OETA-The ​Oklahoma Network's Oklahoma News Report last week to discuss a possible constitutional challenge to the controversial tax incentive for oil and gas wells, which Gov. Mary Fallin signed this week.

A rig hand on a Triad Energy horizontal drilling operation near Alva, Okla. Company CEO Mike McDonald says he likely wouldn't have drilled the well with out a tax break Oklahoma's House Speaker has proposed making permanent.
Joe Wertz / StateImpact Oklahoma

A bill that would adjust a generous tax incentive for horizontally drilled oil and gas wells and extend it to all wells drilled in Oklahoma has cleared budget committees in the House and Senate.

The full House and Senate will consider the measure that the committees approved Tuesday.

The bill would increase the tax rate on horizontal wells from 1 percent to 2 percent for the first three years of a well's production. After that, the rate would increase to the standard production tax rate of 7 percent.

Meredithw / Flickr Creative Commons

State legislators are expected to consider a bill this week that would adjust a generous tax incentive for the oil and gas industry and extend it to all wells drilled in Oklahoma.

A bill drafted on Monday calls for a new 2 percent tax rate on oil and gas produced in Oklahoma. The 2 percent rate would be in effect for the first 36 months of a well's production. After that, the rate would increase to the standard tax rate of 7 percent.

Tyler Ingram / Flickr Creative Commons

Many residents — and some members of the city council — didn’t know Norman’s drinking water is being used for hydraulic fracturing until The Journal Record broke the story in March about Texas-based driller Finley Resources tapping a fire hydrant near Franklin Road.

Meredithw / Flickr Creative Commons

A new poll shows 64 percent of Oklahoma voters oppose state tax incentives for horizontal drilling and support eliminating the incentive to pay for other government services.

Oklahoma levies a 7 percent tax on oil and gas production, but the horizontal drilling incentive lowers the rate to 1 percent for the first 48 months of production. The incentive expires in 2015, and some Oklahoma lawmakers are pushing to make the reduced rate permanent.

alphageek / Flickr Creative Commons

For a fee, most municipalities will give contractors and other industrial users a special water meter and temporary access to a city fire hydrant. The meters and hydrant access are often used for construction sites, and the buyer usually pays a higher per-gallon water rate for the high-flow access.

Don Millican, the Chief Financial Officer of Kaiser-Francis Oil Company.
Joe Wertz / StateImpact Oklahoma

The Kaiser-Francis Oil Company has a lot in common with other storied Oklahoma energy empires. The company has by-the-bootstrap entrepreneurial origins, it’s been battered by boom and bust, and it’s helmed by a billionaire CEO who has weathered controversy and been showered with praise.

But the Tulsa-based exploration and production company is unique in one surprising way: It isn’t pushing for oil and gas tax cuts.

Meredithw / Flickr Creative Commons

A Republican House member from Oklahoma City is proposing an adjustment to the state's tax on oil and natural gas production that would benefit companies that hire Oklahoma workers.

Rep. David Dank proposed a compromise on Thursday that would set the gross production tax rate for all oil and gas wells between 2 percent and 6 percent, depending on how many full-time workers each producer employs in Oklahoma.

A rig hand on a Triad Energy horizontal drilling operation near Alva, Okla. Company CEO Mike McDonald says he likely wouldn't have drilled the well with out a tax break Oklahoma's House Speaker has proposed making permanent.
Joe Wertz / StateImpact Oklahoma

Oklahoma House Speaker T.W. Shannon will author legislation to make permanent an oil and gas industry tax break for horizontal drilling.

The incentive lowers gross production taxes from 7 percent to 1 percent for the first 48 months of production, and was installed in the ’90s to encourage the then-experimental type of drilling. Now days, most oil and gas wells in Oklahoma are horizontally drilled, and critics say the incentives are unnecessary.

State government's financial support of horizontal drilling is being questioned. What was once unique, is now commonplace. The Oklahoma Policy Institute and Headwater Econmics studied just where the state ranks in incentives provided to oil and gas companies.

Meredithw / Flickr Creative Commons

Oklahoma finance officials say major tax breaks handed out to the oil and gas industry during the economic downturn in 2010 cost the state $321 million last fiscal year.

Secretary of Finance Secretary Preston Doerflinger released figures Wednesday that show tax rebates and refunds for drilling totaled $173 million in the fiscal year that ended June 30, while state tax credits cost an additional $148 million.

The huge drain on state coffers has prompted Doerflinger and other state leaders to call for revisiting the tax credits, especially those for horizontal drilling.